MUMBAI: The Indian rupee was little changed on Monday as dollar demand from importers hurdled gains even as US bond yields declined after weak US economic data raised hopes of a September rate cut by the Federal Reserve.
The rupee was at 83.4425 against the US dollar as of 09:50 a.m. IST, barely changed from its close at 83.4225 in the previous session.
Asian currencies were mixed with the offshore Chinese yuan down 0.3%, while the Korean won rose 0.9%.
The dollar index was steady at 105.1 after dipping to a near one-month low on Friday after data showed that US employers added fewer jobs than expected in April and the unemployment rate rose.
The data raised expectations that the Fed would cut rates twice in 2024 with markets currently pricing in about 45 basis points of rate cuts.
Demand to buy dollars at the daily fixing rate also pressured the rupee in early trading, a foreign exchange trader at a state-run bank said.
“Don’t think it will move much lower from here 83.40-83.50 seems safe for the day,” the trader added. Meanwhile, dollar-rupee forward premiums ticked up with the 1-year implied yield up 2 basis points (bps) at 1.68%, aided by a decline in US bond yields.
The 1-year Treasury yield fell 4 bps to 5.13% on Friday.
“Expect the rupee to remain rangebound as the RBI may step in to buy dollars at lower levels,” Anindya Banerjee, head of foreign exchange research at Kotak Securities said.
The Reserve Bank of India’s (RBI) foreign exchange reserves slipped to a seven-week low of $637.92 billion as of April 26, data showed.
Investors now await remarks from Fed officials scheduled to speak later in the day for cues on policymakers’ thinking about the future path of interest rates.
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